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For more than four years, I’ve been covering impact investing as a regular Forbes contributor and have written hundreds of pieces about the space. Here’s the thing: most impact investments are only open to wealthy people. This is a guide to impact investing for everyone else, the 98 percent of the population who don’t meet the criteria for investing with the wealthy.

The term impact investing, I’ve realized, is new enough that even professional investors aren’t yet familiar with it, let alone the typical investor. Impact investing refers to the idea of investing in businesses that will cause a social benefit. Most liken it to philanthropy but with the added benefit of a financial return. An easy example is to consider my 2013 article about Vital Capital, which invested in a community Agribusiness, moderate income housing and a medical center in Angola. Charities also engage in providing food, housing and health care in Angola, but Vital Capital invests in those activities—earning high returns along the way.

The Securities and Exchange Commission requires that investors in certain investments be “accredited.” Although that word connotes a skill or knowledge-based screening, it is a simple test of income and/or assets. Investors with consistent personal income above $200,000 per year or a net worth, excluding a primary residence, of $1 million are considered accredited.

It is important to note that many impact investments are effectively open only to institutional investors and people or families of such high net worth that they invest at institutional scale.

This article is not for them. If you are a billionaire impact investor, you can stop reading now.

Chris Georgandellis, who runs Tree Town Investments, a wealth management firm specializing in socially responsible and impact investments, explained to me, “As you are likely aware, the opportunities available to non-accredited individuals to engage in “impact investing” are currently highly limited. So limited, in fact, that I would say from a traditional investing perspective, they are practically non-existent.”

Thankfully, there are a few and that is all you need to start investing.

Georgandellis's comment begs another question of definitions. What is the difference between socially responsible investing and impact investing? Traditionally, socially responsible investing has been about applying negative screens to portfolios, a movement that began with investors divesting their holdings in companies with operations in South Africa to end apartheid there. Since then, the movement has begun to focus on environmental, social and (corporate) governance or ESG standards for screening good companies.

There are a number of funds and ratings schemes for scoring ESG, including some that give high scores to oil companies, a judgment that some environmentalists would scorn. Relatively few publicly traded companies are operating a business that would qualify as an impact investment. Tesla is an example of a public company I hold as an impact investment.

Some purists would argue, however, that an investment made in the secondary market (buying and selling stocks from other investors rather than upon their issuance from the company) isn’t an impact investment because the company didn’t get the money or use it for good. Given that when a new investor buys shares from an original impact investor the transaction provides liquidity and perhaps a return on investment to the original impact investor, it could be argued that the investment has a positive impact. For purposes of this article, I will include secondary investments as impact investments.

So, the easiest way to become an impact investor is to build a portfolio of publicly traded stocks in companies that do things you like. You might, for instance, build a portfolio of companies in clean-tech and renewable energy.

Increasingly, the line between socially responsible investing traditionally focused on ESG scores and impact investing is blurring. You may conclude that some socially responsible investing funds are doing enough good to qualify for impact investments in your mind.

Garvin Jabusch, co-founder and CIO at Green Alpha Advisors, says, “All a portfolio is in the end is a manager's vision of what will grow and earn returns in the future. Investors have to look at holdings to ensure they agree with the manager's vision of that future, both in terms of achieving sustainability and in terms of what they believe is growing and will continue to grow economically.”

Jabusch points to some tools to help investors screen stocks and funds. “Morningstar started publishing sustainability ratings (defined by number of “globes” on a one through five scale, like their stars) based on Sustainalytics data. Fossilfreefunds.org and Deforestationfreefunds.org both came online, and each rate mutual fund on a handful of metrics that we at Green Alpha think are meaningful by our definition of impact.”

One way for ordinary investors like you and me to invest in instruments that are traditionally open only to accredited investors is to invest with a donation through a donor advised fund or DAF. A DAF is an account you open with a public charity like a small (though there is no upper limit on size) private foundation, you get to advise the charity on where to send the charitable funds. You get a tax deduction when you contribute to the DAF, rather than when you make the grant to the ultimate charity. Some charities that manage DAFs, including some community foundations, will allow you to advise them on investments as well. Hence, using a DAF can allow you to make impact investments in instruments that otherwise would be open only to accredited investors. This is because the money isn’t yours and you’ll never get to put it back in your own pocket; the money belongs to the charity that manages the DAF.

Ross Baird, courtesy of Village Capital

Ross Baird, CEO of Village Capital, which manages a fund that invests in social enterprises says that they have accepted investments from ordinary investors via DAFs. While not in fundraising mode now, he notes that in the past they have had a minimum investment threshold of $5,000, a level that is accessible to some ordinary investors.

Cathy Clark, Adjunct Professor at the Duke Fuqua School of Business and Director of CASE i3: Initiative on Impact Investing, says, “My favorite product to recommend to my MBAs is Kiva. You don't actually get the money back; once you donate the money it becomes charitably designated and cannot come back to you (just like donating to Acumen or a DAF). But you can reinvest the returns over and over and choose the kinds of loans you want to make. And the feedback on where your money is going and who it could be helping is rewarding.”

She likes ImpactAssets, a firm that manages DAFs where 100 percent of the money is invested in impact investments. While donors don’t have to be accredited, the minimum investment amounts are higher than most ordinary investors can afford. Read my past coverage of ImpactAssets here.

Clark also recommends investments via the Calvert Foundation. “There, you can do $25 online or a thousand by mail and earn more return than most bank accounts. Again, you can choose your impact flavor and the risk of loss is near zero because of their clever structure.”

She also recommends RSF, which offers 90 day notes in increments of $1,000 that pay interest at an annual rate set each quarter, currently 0.50 percent. The firm’s website boasts that 100 percent of principle and interest has always been paid in the past. RSF lends the money to small social enterprises that may also receive grant support.

Jennifer Pryce, President and CEO of the Calvert Foundation, adds, "At Calvert Foundation, our Community Investment Note is available starting from $20, the lowest minimum investment rate in this space. The Community Investment Note is also the only one of its kind that is available through financial advisors and brokerage firms."

Jenny Kassan, courtesy of Force for Good Fund

Jenny Kassan, attorney and capital raising coach for social enterprises, specializes in helping them raise money via the crowd, including the recently implemented Regulation Crowdfunding that allows small businesses to issue securities via FINRA-registered portals.

She says, “There are more and more opportunities that open impact investing to everyone. There is a very new platform that aggregates opportunities in one place called Investibule. This site has all kinds of offerings such as zero-interest Kiva loans, offerings under the new federal crowdfunding exemption, state-registered public offerings, donation-based crowdfunding, and more. You can search for opportunities in your area, by type of business, by type of investment, etc.”

She says the number of securities offerings under all securities exemptions from registration should increase, due to the recent implementation of new rules from the SEC that changed intra-state crowdfunding restrictions and increased the amount issuers can raise under certain circumstances. The result will be a rapidly growing set of investment opportunities for ordinary investors.

Kassan herself is raising a fund to invest in social enterprises, she calls the Force for Good Fund. The minimum investment is just $1,000. She raising money on a site called Wefunder, which has become the most popular platform for ordinary investors to find startup investments, including impact investments.

Dr. Stephanie Gripne, of the Impact Finance Center, is upbeat, too. “The number of impact investing opportunities for ordinary investors expands every day. For ordinary impact investors from community notes, such as Denver’s Ours to Own Notes, to co-ops, such as Poudre Valley Farms, to sustainable real estate investments such as Direct Source Wealth, which utilizes new crowdsource funding laws.

Stephanie Gripne, courtesy of the Impact Finance Center

She also pointed to a campaign on Wefunder, this one for an environmentally minded outdoor sporting goods company called My Trail. The company has also been conducting a direct public offering under Colorado law that allows ordinary investors located in Colorado to participate.

Alon Goren, co-founder of Crowd Invest Summit, is especially excited about impact investing opportunities created by the implementation of Regulation Crowdfunding. “With the new crowdfunding investment rules that allow the average American access to investment opportunities, using sites like Crowdfunder or StartEngine, you can now sift through the thousands of companies, find the ones that align best with your passions, your ideals and your values, and you can now invest, participate, and share in the profits of these companies.”

Mike Norman, co-founder and President of Wefunder, says, "Public market ESG investing is more about not doing bad than doing good. Real impact comes from investing in small companies with a new take on solving problems that the investor thinks are important. Personally, investing in a fund that won't include guns, alcohol or tobacco doesn't feel like making an impact to me. I want to find the next Tom's Shoes or Solar City when they are just getting started. That's where the solutions to our most pressing challenges will come from, and though it's also high risk, that's where you can find high returns are as well."

In February of 2016, thousands of ordinary investors put money into Elio Motors, a social enterprise that is building a three-wheeled vehicle that gets 84 miles per gallon and costs just $7,200. You can read my coverage here and here.

Elio raised the money on StartEngine giving ordinary investors the opportunity to participate in what was effectively a mini-IPO. The shares are now trading, albeit thinly, with the ticker ELIO.

Ron Miller, courtesy of StartEngine

StartEngine CEO Ron Miller says, "For over 80 years, only wealthy people had the opportunity to direct their investments into businesses and private companies with positive social benefits. Thanks to the JOBS Act, all that has been changed. Now, everyone has a chance to invest in great new companies and technologies that will change the world for the better. Online Public Offerings represent the means by which the true democratization of investment opportunity comes to life."

Matthew Weatherley-White, co-founder and Managing Director, The CAPROCK Group, notes that Community Development Finance Institutions are a good option for conservative impact investing. These special entities are required to meet Federal standards to qualify as CDFIs. You can find a CDFI in your community by visiting the Opportunity Finance Network website, which features a tool for finding a CDFI in your community. While not all CDFI’s accept small deposits or investments, some operate as credit unions and provide robust banking options.

Rod Schwartz, the CEO of ClearlySo, a financial advisory firm for social entrepreneurs in the UK, says, “The idea that impact investing (II) is the preserve of institutions or only the rich is breaking down rapidly, particularly in the UK, where the regime is very much encouraging II.” He notes several examples:

Individuals may pretty easily qualify for investment via Ethex, which is a portal into dozens of high impact investments. The Social Stock Exchange is also working on increasing retail investor engagement

Millions of pounds have been invested via Community Share Issues, which support high impact investments in local communities

Individuals may invest in Community Development Finance Institutions, and get a tax break—these deposit-like products lend money to the financially excluded

There is a bond fund available via Threadneedle, which is an II bond fund

Vincent Bradley, courtesy of FlashFunder

Vincent Bradley, CEO and co-founder of Flashfunders, explains why we are at the very beginning of a long-term trend and impact investment opportunities are so likely to grow in the future. “The next big wave of entrepreneurship globally is going to be impact orientated businesses. As of 2016, Millennials, now numbering 75+ Million have overtaken the Baby Boomer generation as the largest demographic in the U.S. More importantly, millennials care about the social and environmental impact of the products and services they are spending their money on. Moving forward, good business will be impactful business.”

Deeply optimistic, I’m an author, educator and speaker; I call myself a champion of social good. Through my work, I hope to help solve some of the world's biggest problems--poverty, disease and climate change. My books—read over 1 million times—on using money for good, perso...